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DevOpsGroup Blog The start-up Valley of Death: what it is and how to power through it

The start-up Valley of Death: what it is and how to power through it

It’s a well-known fact that most start-ups fail. What’s less well-known is that most tech start-up failures are caused by the same typical challenges. Facing them with your eyes open can increase your chances of success.

Here at DevOpsGroup, we’re fans of Howard Love’s book The Start-Up J Curve. Love suggests the common belief that business success follows a linear upward trajectory is a root cause of many failures. He says there’s usually a period between starting up and scaling where growth dips before making a recovery.

This dip is the Valley of Death.

You can’t avoid the Valley of Death. It’s an inevitable part of the business development journey. For many tech businesses it marks the start of their demise. But if you know it’s coming and navigate it with skill, the outcome can be more positive. The trick is to emerge quickly, ensuring your business is strong, resilient and ready for exponential growth.

Before we consider how to do this, let’s look at the six key start-up phases according to Love.

DevOpsGroup Valley of Death Diagram

Start-Up J Curve phases

  1. Create – this is the exciting early stage where an initial product idea begins to take shape, a small team comes together to bring it to life and first capital is raised.
  2. Release – the product finally launches! However, getting here often takes too long, the process causes much frustration and early user feedback is usually disappointing.
  3. Morph – this is ‘make or break’ time. You need to study the user feedback and iterate the product until you get it right. But it can be tough. Raising capital is harder and if you don’t move fast enough the money can run out. 
  4. Model – once product-market fit is achieved you have to optimise the business model to ensure it’s profitable. This is where margins and scalability come to the fore.
  5. Scale – this is the really hard part. Care must be taken to scale at the right moment. Any product imperfections that you take with you will get bigger, causing more pain and suffering over time.
  6. Harvest – if you overcome the challenges, now is the time to enjoy the fruits of your labour. A good, positive cash flow brings flexibility and choice, whether you’re looking for acquisition or an IPO.

So, what’s the secret to emerging from the Valley of Death and reaching that elusive ‘harvest’ phase?

Firstly, you need to get to ‘morph’ as quickly and cost-effectively as you can. Don’t waste energy in ‘create’ trying to make the prototype perfect. At this point, it’s the core hypothesis that needs testing. You just need to get the product idea in front of customers – and fast.

From here, it’s all about making the right moves during the ‘model’ and ‘scale’ phases. In other words, you need to optimise how things are done and rearchitect for growth.

Rearchitecting for growth

For a tech start-up to scale successfully, major step-changes in platform architecture are usually required. The trick is to figure out what, where, when and how to change.

Most start-ups have a lot of technical debt. In fact, they should have a lot of technical debt, as a consequence of working fast to create and iterate the product. Organisations not accruing technical debt at this point in their journey are unlikely to be iterating quickly enough to escape the valley of death. For them, scaling is little more than a pipe dream.

But problem debts need to be paid off before scaling, or the problems will get exponentially bigger as the business grows.

When you take on technical debt deliberately, with your eyes open, identifying it is straightforward. But much of the time, in the necessary rush to achieve product-market fit, start-ups incur ‘inadvertent’ or ‘reckless’ debt. (Check out our blog on Martin Fowler’s technical debt quadrant for more on this).

If you’re in any doubt about your technical debt status, you need to get a handle on it ahead of scaling. This is especially true if systems and processes are prone to errors and glitches, or you operate in a regulated industry where security and stability are critical.

Make time for a Well-Architected Review. Evaluating your infrastructure in relation to proven best practice is the quickest and surest way to identify and prioritise what needs to change. You’ll either come away with a new roadmap for technical improvements or validate plans you already had. Either way, it brings focus and purpose to the ‘model’ and ‘scale’ phases, so you exit the Valley of Death in good shape.

Achieving operational maturity

Addressing technical debt will make your business stronger and more resilient. But high-growth tech companies need more than that.

Rapid change and innovation at scale demands high-performance systems. And for growth to be sustainable and profitable, sophisticated ways of working are required.

Modern cloud environments hold everything a tech scale-up needs to underpin effective and sustainable growth. But unlocking those capabilities isn’t always easy. There are so many potential choices to make and paths to take. So How do you know which is best for your circumstances? How do you avoid analysis-paralysis? How do you escape the Valley of Death with your business intact?

On 1st October, our CTO Steve Thair and AWS Solutions Architect Neil Lock join forces to unravel these questions. In a webinar focused on tech scale-ups they’ll look at how to overcome the challenges of rapid growth.

Topics on the agenda include re-platforming to embrace DevOps technologies like container orchestration and infrastructure as code. They’ll also look at how self-service platforms underpin modern operations practices.

Register here and help your business navigate the Valley of Death with confidence.

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